Respected, sizeable
and experienced
investment team
Core skills in
quantitative, fundamental
investing
Strong track record of delivering high-quality alpha

IFM Investors’ Active Equites team applies a quantitative investment approach with a fundamental overlay to three key investment strategies. We believe that alpha can be sourced from repeatable and predictable behavioural biases, specifically momentum and value investing. We recognise that purely quantitative driven strategies that rely on systematic factor screens are insufficient and may falter over time, so our fundamental overlay seeks to mitigate certain risk factors (i.e. value traps, crowded trades) that purely quantitative driven strategies tend to ignore. The Active Equites team has a formal commitment to fundamental research and continued improvement to investment processes.

Investment philosophy

The investment philosophy for this strategy is that listed equity markets, particularly larger capitalised stocks, are relatively efficient and that the best approach to adding consistent value is to combine a systematic (or quantitative) approach with a fundamental overlay. We believe this approach – a ‘Smart Quant’ philosophy – provides the best method of producing consistent returns as it combines the breadth and consistency of quantitative investment with the skills and judgement of a fundamental approach.

Distinctive fundamental overlay is a key risk management tool

A crucial component of the investment process is the team’s fundamentally based ‘Expectations at Risk’ (E@R) overlay. This integral step is designed to mitigate risks that traditional quantitative strategies tend to ignore. The common pitfalls of quantitative investing include being caught by ‘value traps’ and in ‘crowded’ momentum trades. E@R identifies the key drivers of a stock’s future earnings and assesses likely earnings outcomes for each stock. This helps us quantify the likely upside/downside risk in a stock’s potential earnings, as well as the level of dispersion in possible earnings outcomes.

circle-image-equities

Experienced investment team

The Active Equities team is a respected and experienced team of investment professionals based in Sydney and Hong Kong. The team is led by Lachlan Davis, Head of Large Cap Active Equities, with Mark McClatchey as Head of Research.

The team has more than 20 years' experience in quantitative and fundamental investment management in Australia and more than 10 years' experience in Asia. It has managed equity portfolios across the risk spectrum, from enhanced index to long/short and hedge fund strategies and is highly experienced in managing large amounts of AUM having managed over A$15b.

The team applies its core skills in both quantitative and fundamental investing across a range of strategies using the same underlying investment process and model.

What sets our Active Equities strategies apart?

  • Experienced team

    Strategies are managed by a respected, sizeable and experienced team of professionals based in Sydney and Hong Kong.

  • Track record

    Long-term track record of developing and managing quantitative investment strategies.

  • Fundamental overlay

    Proprietary fundamental overlay helps mitigate the pitfalls of relying solely upon quantitative approach.

  • Research and analysis

    Skills in research and analysis so that we can intelligently review emerging trends, corporate actions and market events.

  • Process enhancements

    Continued improvements to approach – we aim to incorporate emerging factors and down-weight diminishing factors.